Acton Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations. The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the company's predetermined overhead rate for the year. The predetermined overhead rate is closest to:

Question

Acton Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations.  The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the company's predetermined overhead rate for the year. The predetermined overhead rate is closest to:

Quizplus · Accepted Answer

Predetermined overhead rate = Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base
= $139, 080 ÷ 3, 800 machine-hours
= $36.60 per machine-hour

Acton Corporation, Which Applies Manufacturing Overhead on the Basis of Machine-Hours